Buying life insurance in a country like Singapore is one of the most important financial decisions you may have to consider. It is like leaving an inheritance for your loved ones when you die. A life insurance policy provides financial support for the livelihood of your family in the event of your passing. However, this insurance is not one of those “buy and forget” policies. You cannot just take it and forget about it until your family really needs it. If getting right coverage is important for your financial planning, then avoiding certain mistakes after you buy the right insurance policy is also vital for a secure future. Here are three mistakes you should avoid when it comes to your life insurance policy.
Forgetting to make a nomination
Singaporeans often overlook the process of making a nomination while filling their policy form. In fact, a recent survey has revealed that only 2% of life insurance policies have named beneficiaries while a whopping 98% of Singaporeans have not bothered to fill in that piece of paper. When you do not name a beneficiary, then it takes time for your family to receive the claims amount if anything unfortunate should happen to the insured. The insurer may be unable to determine a proper claimant, resulting in tussle among family members.
Mixing insurance with investment
Insurance policy and investment have different roles. Never mix them. Always keep your retirement savings and your life insurance separate. Although bundled insurance-cum-investment products do work for some customers, most people are not suitable for this bundled scheme. There is an old saying – “Stick with term and invest the rest.”The purpose of life insurance is solely for risk protection. If you have taken life insurance and you die, your nominee gets something. If you live, no one gets anything. It is a raw deal. Getting 'something' on maturity is driving many people to costly insurance plans that offer very little insurance protection. Instead of mixing investment and insurance plans, go for term insurance. It is the purest, cheapest and best form life insurance available in Singapore.
Keeping the policy on auto-renewal
The auto-renewal option offers peace of mind. Your insurance will automatically get renewed and chances of a policy lapse will not be there. However, auto-renewal can make your insurance plan more costly. As rates of life insurance products keep on changing, check on the current low rates offered by your insurer while renewing your policy. Take for example, you were a chain smoker when you bought the insurance policy, but now you have stopped smoking. Today, your insurance rate ought to be less than what you paid when you have purchased it.
To sum it up, you should always perform your due diligence before buying a life insurance policy in Singapore. Once you have decided which policy is best suited to your needs, avoid the aforesaid mistakes before and after buying life insurance to provide your family the financial support they need at an otherwise difficult time of loss.
Forgetting to make a nomination
Singaporeans often overlook the process of making a nomination while filling their policy form. In fact, a recent survey has revealed that only 2% of life insurance policies have named beneficiaries while a whopping 98% of Singaporeans have not bothered to fill in that piece of paper. When you do not name a beneficiary, then it takes time for your family to receive the claims amount if anything unfortunate should happen to the insured. The insurer may be unable to determine a proper claimant, resulting in tussle among family members.
Mixing insurance with investment
Insurance policy and investment have different roles. Never mix them. Always keep your retirement savings and your life insurance separate. Although bundled insurance-cum-investment products do work for some customers, most people are not suitable for this bundled scheme. There is an old saying – “Stick with term and invest the rest.”The purpose of life insurance is solely for risk protection. If you have taken life insurance and you die, your nominee gets something. If you live, no one gets anything. It is a raw deal. Getting 'something' on maturity is driving many people to costly insurance plans that offer very little insurance protection. Instead of mixing investment and insurance plans, go for term insurance. It is the purest, cheapest and best form life insurance available in Singapore.
Keeping the policy on auto-renewal
The auto-renewal option offers peace of mind. Your insurance will automatically get renewed and chances of a policy lapse will not be there. However, auto-renewal can make your insurance plan more costly. As rates of life insurance products keep on changing, check on the current low rates offered by your insurer while renewing your policy. Take for example, you were a chain smoker when you bought the insurance policy, but now you have stopped smoking. Today, your insurance rate ought to be less than what you paid when you have purchased it.
To sum it up, you should always perform your due diligence before buying a life insurance policy in Singapore. Once you have decided which policy is best suited to your needs, avoid the aforesaid mistakes before and after buying life insurance to provide your family the financial support they need at an otherwise difficult time of loss.
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